Annual Economic Outlook

2023 Annual Economic Outlook

Collective bargain: How trade-offs will define the economy in 2023

Many central banks face an unpleasant dilemma: they need to raise rates to bring inflation down, but excessive tightening could lead to recession. At a micro level, businesses must decide whether to raise prices higher to protect margins while households must weigh whether to reduce savings rates further in order to maintain their current pace of spending. Collectively, this give-and-take will define the economy in 2023.